Private banks and advisers to Britain's super-rich say some clients may quit the country if Labour wins next month's general election and pushes ahead with plans to abolish tax protections on offshore wealth they wanted to pass to future generations.
Keir Starmer's Labour Party, which leads in the opinion polls and which published its manifesto on Thursday, is targeting Britain's wealthiest people to support a public spending programme focused on schools, welfare, energy reform and the National Health Service.
Around 70,000 people who live in Britain but pay little or no UK tax on the money they earn overseas were already facing higher bills after the incumbent Conservative government said in March it would phase out this "non-dom" status over time.
But in proposals published in April, Labour said it would move faster to scrap relief on foreign-earned income and expand Britain's inheritance tax regime to include foreign assets held in trusts designed to mitigate such levies.
Critics say the proposed changes could do Britain's lukewarm economy more harm than good, making the country a less attractive place for the world's wealthy to live and invest in, reducing overall tax revenues rather than growing them.
Spain, Italy, Switzerland, Dubai and Singapore are proving popular among wealthy UK families seeking a lower-tax place to live, said Nigel Green, CEO of wealth adviser DeVere Group.
There is no comparable inheritance tax in the United Arab Emirates, Singapore or most Swiss cantons, while Spain and Italy impose rates of 34% and 8% respectively, data from PWC shows.
Traditionally, governments who change inheritance tax treatment of trusts have not applied changes retroactively to existing structures. But law firms and advisers say Labour is unlikely to permit "grandfathering" of such schemes, citing comments attributed to shadow finance minister Rachel Reeves in some media reports.
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I’m wearing no political rosette but surely creating more wealth-making opportunities is more economically viable for a nation than just maintaining wealth preservation policies? Spain take note! I wish.